Quebec Inc.

[.anthurium.]

Quebec Inc. must embrace globalization - Incestuous, government-supported model is outdated
The Gazette, p. A-17 / Michel Kelly-Gagnon, 17 avril 2009



I would be a fan of Quebec Inc. if being one meant celebrating the dynamism of captains of industry developing world-class competitive businesses, helping to bring prosperity here with their entrepreneurial skills.

Unfortunately, since it became a buzzword in the 1980s when Jacques Parizeau started using it, Quebec Inc. has meant the incestuous relationships among companies that benefit from the Quebec government's industrial policies, often at the expense of taxpayers and non-favoured businesses.

Josée Legault, in criticizing the new head of the Caisse de dépôt et placement ("Sabia meeting shows how much Quebec Inc. has changed," Opinion, April 10), gave Quebec Inc. an appropriate but misleading description: "that group of powerful companies created in the wake of the Quiet Revolution, partly with the help of state subsidies, which bolstered Quebec's economic autonomy."

This is misleading for several reasons.

First, three of the companies she lists (Desjardins, Seagram and Banque nationale) did not wait for provincial subsidies handed out starting in the Quiet Revolution; they were important players before that (in the case of Banque nationale, under other names before mergers).

Second, "autonomy" is not a relevant economic concept. The most "autonomous" economies in the world, Albania under Enver Hoxha or North Korea today, also count among the poorest, precisely because of their policies.

What is important is that anybody should have the opportunity and the freedom to launch a business, trade with potential clients anywhere in the world,and buy from the largest pool of suppliers possible. That's how jobs and wealth are created.

We can debate the cultural and institutional reasons why there were relatively few large Quebec companies headed by francophones until recently. But despite this, Quebec was one of the most prosperous societies in the world in the 19th and early 20th century, well before Jean Lesage came to power. And the current crop of successful entrepreneurs could not have reached those heights simply because they were protected from competition and had easy access to taxpayers' money. That is a recipe for keeping weaklings alive. The entrepreneurs succeeded first and foremost because of their entrepreneurial skills and hard work.

I find it amazing that people who think of themselves as "progressive" still look favourably on this model of a more or less planned and closed economy run by a group of mandarins for the benefit of their friends and clients in the private sector.

Such policies are defined as "social democratic" today, but are in fact very similar to the corporatist model that was popular in the 1930s in Italy and Portugal and among right-wing religious nationalists in Quebec.

Far from supporting free-market policies, those right-wingers opposed what they saw as divisive, too-individualistic aspects of capitalism. They thought they could control society by having an all-powerful government sit down with interest groups and business and union leaders to decide how to manage economic development. The economic summits so popular in Quebec are a direct descendant of this view.

We should be thinking outside this narrow box and see our economy as an open, pluralist system that includes all kinds of networks, some focused on Quebec, others on the rest of Canada and beyond. A system where firms seek opportunities and partnerships everywhere they can instead of waiting for bureaucratic direction.

In today's globalized world, when it is so easy to communicate and do business around the planet, it is natural that Quebec businesses would be mostly concerned with "competing and profit-making as (their) main priority, like businesses elsewhere," as Legault writes.

This is a sign of maturity, dynamism and openness. This is how wealth is being created. And we should be happy about it.

Michel Kelly-Gagnon est président de l'Institut économique de Montréal.